If you‘ve ever hesitated to type your credit card number into an online form, you‘re not alone. Online shopping may be quick and convenient, but it also comes with risks like card fraud. As a cybersecurity professional with over a decade of experience, I‘m often asked if virtual credit cards live up to their promises of enhanced online security.
The short answer is yes – when used properly, virtual credit cards add a layer of protection that regular cards lack. Read on as I fully explain what virtual cards are, how they work, their pros and cons, and when to use them for optimal safety.
Defining Virtual Credit Cards
A virtual credit card is a temporary, digital credit card number that is linked to your real account. It looks and functions just like a normal card, with a unique 16-digit number, expiration date, and security code. But it masks your actual card details when making purchases online or over the phone.
Virtual credit cards are sometimes called disposable or single use because the temporary card number can only be used for one transaction or for a limited period. After it‘s used or expires, the digital card is no longer valid.
When you make a purchase with a virtual credit card, the charge still appears on your real credit card statement. But only the temporary digital card information is captured by the merchant, not your real credit card details.
If the virtual credit card gets compromised, you don‘t have to panic and cancel your physical card. You simply deactivate or delete that temporary number and generate a new virtual card for your next online purchase.
The Benefits of Virtual Credit Cards
As an IT security expert, I‘m a firm believer in utilizing virtual credit cards as an extra defense against online threats like data breaches and credit card theft. Here are some of the top benefits virtual cards provide:
- Your real 16-digit card number stays protected since only virtual card details are exposed.
- If a site you shopped at suffers a data breach, hackers won‘t be able to access your true account number, expiration date, or security code.
Custom Spending Limits
- Many virtual cards allow you to set low spending maximums like $50 or $100 per transaction.
- If your virtual card does get stolen, thieves can only charge up to your customized limit, minimizing potential damage.
Avoid Account Cancellation
- If your virtual card gets compromised, you can quickly cancel that temporary number without your physical card or account being affected.
- This prevents the hassle of updating all your billing details and subscriptions linked to your real card.
Contain Fraudulent Charges
- Limiting a virtual card‘s use to a single merchant or transaction contains any potential fraudulent charges to that activity.
- Your real credit account stays protected from any wider-spread impacts.
- In 2021, 43% of data breaches involved the theft of credit card numbers according to Verizon‘s annual report. Virtual cards limit your exposure.
Streamline Account Management
- Assign unique virtual cards to monthly services to spot charges easier on your statement.
- Set an expiration date on a virtual card to prevent surprise renewals or subscriptions you forgot about.
- Give employees access to company funds without handing out the corporate card. Limit their spending with customized virtual card limits.
Safely Shop on Public Wi-Fi
- Public hotspots can expose your connection to hackers. Using a virtual card when shopping on public Wi-Fi keeps your real number secure.
- I always recommend travelers generate a temporary virtual card specifically for accessing hotel and airport Wi-Fi networks during trips.
How Do Virtual Credit Cards Actually Work?
Your credit card provider (e.g. Visa, Mastercard, Amex) uses advanced encryption and tokens to generate a 16-digit virtual card number linked to your real account.
This unique, temporary number has an expiration date and security code just like your physical card. However, you can access and use the virtual card entirely online or over the phone for digital transactions.
When checking out on a website or booking travel over the phone, you simply provide the virtual card details instead of your real credit card number. The merchant processes the virtual card exactly like a physical one.
The charge appears on your normal statement, but pulled from your real credit account associated with the virtual card tokens behind the scenes. You can easily track purchases made with the temporary number.
If your virtual card gets compromised, you log in to your credit card account and deactivate that single virtual number. Your real card stays intact with its original number and details. You can instantly generate a fresh virtual card for your next online purchase. Rinse and repeat!
Should You Use Personal or Corporate Virtual Cards?
Virtual cards provide ample benefits whether you‘re making personal online purchases or handling company expenses.
For personal protection, I recommend using virtual credit cards any time you‘re shopping on an unknown website or public Wi-Fi. The single-use nature limits the damage from potential theft.
For businesses, virtual cards enable you to tightly control employee spending and credit access. Issue temporary virtual cards with preset limits to containing spending to approved categories. No need to hand out real card numbers.
On the company side, virtual cards also streamline accounting with unique numbers tracing back to each department, location, or project.
And the damage is minimal if an employee‘s virtual card is compromised. Simply deactivate it and spin up a replacement.
Getting Started with Virtual Credit Cards
The first step is checking whether your credit card issuer provides virtual account numbers. Major providers like Visa, Mastercard, American Express, Capital One, and Citi often offer virtual card capabilities.
The signup process varies based on your credit card provider:
- Some allow instant virtual card generation via your online account dashboard or mobile app.
- Other issuers require you to contact customer service to request a virtual card option be added to your account.
- Certain credit cards may limit virtual numbers only to high-end card products.
During enrollment, you‘ll have the chance to configure spending limits and expiration dates for your virtual cards. These limits add critical fraud protection.
I suggest starting with a low $50 limit on any new virtual card until you test it out. Decrease limits further for very high-risk transactions.
And set an expiration 30-60 days out, depending on your intended usage. This prevents forgetful oversights where old virtual cards stay open too long.
When Should You Turn to Virtual Credit Cards?
Based on my experience in the cybersecurity trenches, here are the prime scenarios where virtual credit cards make smart sense:
Online Shopping at Unknown Retailers
- Anytime you visit a new ecommerce store, use a disposable virtual card in case their site security is shoddy. This contains the threat since the card instantly expires after one use.
Public Wi-Fi Activity
- Coffee shops, hotels, and airports frequently have weak security controls on public hotspots making it easy pickings for hackers to intercept your data. A single-use virtual card prevents your real information from being snooped on.
Phone/Mail Order Purchases
- Giving your credit card number over the phone or via mail is always risky without being able to entering it directly. Use a temporary virtual card to keep your physical account details private.
- When trying out membership programs or free trials, use a virtual card set to expire before recurring fees kick in. This avoids MESSY and numerous calls to cancel services and saves your real card info.
Company Employee Spending
- Issue virtual cards with controlled limits to authorize employee business expenses while limiting access to real account details.
- Virtual cards provide peace of mind if your card details are cloned or skimmed at foreign terminals and ATMs which are notorious hotbeds for fraud. Just deactivate the temporary card once your trip wraps up.
- Give your kids virtual cards to shop online with training wheels before trusting them with your real credit card digits. Shut off their access anytime by killing the virtual card.
Judging the Limitations of Virtual Credit Cards
As with any solution, virtual credit cards aren‘t perfect. Here are a few limitations to factor in from my experience:
- Not Accepted In-Store – Since no physical card exists, you can only use virtual card numbers for online, phone, or mail purchases.
- Extra Steps – It takes a minute to generate a new virtual card for each online merchant. Some may find this inconvenient compared to entering their card number.
- Tracking Required – You‘ll need to monitor virtual card transactions closely and deactivate expired or unused cards to avoid unintended continued charges.
- Limited Providers – Not all credit card companies offer virtual numbers. You may need to switch card issuers to access this feature.
- Only Digital Purchases – Virtual card numbers don‘t work everywhere, especially for things like hotel check-ins that require showing your physical card.
For most mainstream shopping, these limitations are minor. But weigh them appropriately against your specific spending habits.
And while no solution is bulletproof, IT professionals like myself consider the extra diligence needed to effectively use virtual credit cards more than worth it for the security boost they offer.
How Virtual Cards Stack Up to Digital Wallets for Security
Digital wallets like Apple Pay and Google Pay are another popular way consumers go cardless. But it‘s critical to note that virtual credit cards and digital wallets are very different when it comes to security.
Digital wallets simply store your real credit card information on your mobile device for tap-to-pay convenience at checkout. All of your actual details live in the app. If your phone is compromised, thieves gain access to your real credit card number.
Virtual cards, on the other hand, actively mask your real number and generate temporary card details to be used at checkout. This adds a layer of abstraction protecting your identity and accounts.
Here‘s a visual comparison of how the two card storage methods differ:
Both options increase convenience, but only virtual cards increase security through disposable numbers. I advise using digital wallets together with virtual cards for optimal protection and flexibility.
Answering Your Virtual Credit Card FAQs
I get a ton of questions from readers about how to use virtual credit cards safely and effectively. Here I‘ll tackle some of the most common virtual card FAQs:
Are virtual cards secure forms of payment?
Yes, when managed properly, virtual credit cards add a great additional layer of security beyond physical cards. The temporary nature of the numbers limits fraud exposure.
What happens if my virtual card gets stolen?
You simply log in to your credit card account and deactivate the compromised virtual card. Your real credit card stays intact and you generate a fresh virtual number.
Where are virtual cards accepted?
Anywhere that accepts your normal card brand (Visa, Mastercard, etc). Virtual cards work online, over the phone, and by mail.
Can I use virtual cards in brick-and-mortar stores?
Unfortunately no, since no physical card exists. Virtual cards are for digital transactions only.
Do I have to pay for a virtual card?
Typically no, if offered by your credit card provider. Some third-party virtual card services may charge access or usage fees.
How many virtual cards can I create?
It varies based on your credit card issuer. Some allow unlimited virtual cards while others restrict you to only 1-5 active virtual numbers.
Can I set spending limits on virtual cards?
Many providers do allow you to preconfigure transaction size limits when generating new virtual card numbers for added security.
The Bottom Line
Here‘s the bird‘s eye view on virtual credit cards:
They provide powerful protection for your real credit card details thanks to disposable numbers and spending limits. This makes virtual cards ideal for online shopping, public Wi-Fi use, trying services, and controlling employee purchases.
But they do take some extra work to manage properly compared to physical cards. You‘ll need to monitor statements closely, deactivate expired or unused virtual cards quickly, and potentially switch providers if your issuer doesn‘t offer virtual numbers.
As an IT security expert, I think the relatively small overhead of virtual credit card management is more than worth it. The limited fraud exposure and account control brings me great peace of mind compared to freely using my real card everywhere.
I hope this deep dive dispelled any uncertainties you had around the safety and inner workings of virtual credit cards. Please reach out if you still have any other virtual card questions!